Government Contractor Compliance & Regulatory Update

Federal Contractor Minimum Wage Increase Announced – Changes Effective January 1, 2018

On September 15, 2017, the Department of Labor announced an increase in the minimum wage that certain federal contractors must pay to employees.  This comes as part of a planned incremental increase in the federal contractor minimum wage implemented by President Obama’s 2014 Executive Order (the “Order”).

As discussed in a previous blog post on the Order, the minimum wage requirement only applies to certain federal contracts.  Specifically, the Order only applies to:

  • procurement contracts for services or construction;
  • service contracts exceeding $2,500 covered by the Service Contract Act;
  • contracts for concessions; and
  • contracts that are both (a) entered into the with the Federal Government in connection with Federal property or lands and (b) covered by the Fair Labor Standards Act, Service Contract Act, or Davis-Bacon Act.

Beginning January 1, 2018, the minimum wage for covered federal contractors will increase to $10.35 per hour for hourly workers.  For tipped employees, the minimum wage for federal contractors will increase to $7.25 per hour.

OFCCP Holds First of Three Compliance Assistance Town Hall Meetings

As we previously reported, the OFCCP announced in August that it would hold three “compliance assistance” town hall meetings. The first was held on September 19, 2017, at the Department of Labor’s Headquarters in Washington, D.C. Proskauer was at the meeting, which was attended by government contractor representatives from many different sectors of the economy, as well as a number of OFCCP National Office Representatives, Regional Directors, District Directors and Compliance Officers.

Acting OFCCP Director Tom Dowd opened the town hall by welcoming the attendees. He explained that OFCCP is interested in “enhancing compliance assistance,” noting that the OFCCP’s compliance assistance mission is “equally important” to its compliance evaluation program. He lamented the fact that government contractors appear reluctant to seek compliance assistance advice from OFCCP, fearing doing so would make it more likely they would be selected for a compliance evaluation. He assured the attendees that this was not the case.  He explained that the purpose behind the compliance assistance town hall meetings is to “gather input” from government contractors and give “serious consideration to their ideas” about how to improve OFCCP’s compliance assistance efforts.

Over the next three-and-a-half hours, the participants at the town hall worked in small groups to develop ideas for what OFCCP could do to improve compliance assistance efforts and collaboration with federal government contractors. These ideas were then shared and discussed among the participants. Suggestions made over the course of the meeting included improvements to OFCCP’s website, creation of infographics providing easy-to-understand explanations of compliance requirements, creation of an on-line video learning library, and publication by OFCCP of common compliance issues uncovered in contractor audits.

OFCCP officials did not comment on the ideas, but were in attendance to listen to contractors’ concerns and suggestions. Acting Director Dowd did, however, respond to one comment about compliance officer “bullying.”  He told the attendees that if anyone experiences bullying, they should report it to the compliance officer’s superior as such behavior is not tolerated by the OFCCP.

Key Take Away.  The town hall meeting and Acting Director Dowd’s comments reflect the OFCCP’s efforts to improve the dynamic between the agency and the government contractor community. It is clear that after years of cold relations between the OFCCP and government contractors, OFCCP is interested in improving relations. The participants at the Washington, D.C. town hall generated innovative and interesting ideas that would help OFCCP achieve this goal. It remains to be seen if these ideas will be implemented by the OFCCP.

The OFCCP will hold two more town hall meetings: one in San Francisco on September 26, 2017, and one in Chicago on September 28, 2017.

Department Of Labor Challenges ALJ’s Decision On Google’s Obligation To Respond To OFCCP Data Requests

In July, we reported that an Administrative Law Judge (“ALJ”) had ruled on OFCCP’s dispute with Google over the tech giant’s refusal to turn over certain documents in connection with a routine audit of Google’s headquarters. In his Recommended Decision and Order, the ALJ narrowed the scope of what OFCCP could request from Google without identifying additional justification for the information requested. Our prior post on the decision can be found here.

On August 23, 2017, the Department of Labor (“DOL”) filed an appeal  of the ALJ’s decision with the Administrative Review Board (“ARB”). In its filing, the DOL contends that the ALJ failed to “apply the proper Fourth Amendment standard,” and that Google should be ordered to “fully comply with [the] OFCCP’s information requests, which include: employee-level compensation data from 2014, full salary and job history information for those employees listed in the 2014 dataset, and names and contact information for employees listed in the compensation data request.”

The DOL’s arguments reflect an effort to maximize its ability to obtain information from government contractors during compliance audits. In essence, the DOL contends that the ALJ applied too high of a relevance standard in assessing the reasonableness of OFCCP’s requests, and too low of a burden standard when balancing the government’s need for information with the hardship its demands would place on the government contractor. The DOL argues that when the proper standards are applied, all of the information sought by OFCCP from Google should be produced.

Google will have a chance to respond to the arguments made by the DOL prior to a ruling by the ARB. We will continue to report on this case as developments warrant.

Trump Administration Signals Delay in Merger of EEOC and OFCCP

As we previously reported, President Trump, as part of his Fiscal Year 2018 Budget request, proposed a merger of the Office of Federal Contractor Compliance Programs (“OFCCP”) and the Equal Employment Opportunity Commission (“EEOC”) to “promote greater efficiency and effectiveness.”  In an August 24, 2017 letter, Acting Director of the OFCCP, Thomas Dowd, signaled a delay in the proposed merger.

In his letter to The Institute for Workplace Equality – a group opposed to the merger – Acting Director Dowd informed the group that its concerns were being considered by the OFCCP and the Trump Administration. But he also shared “that the consolidation proposal includes several challenging transition issues” which “could delay” the merger.

He explained that such a merger would require congressional amendments to the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) and Section 503 of the Rehabilitation Act, laws which govern government contractor obligations relating to individuals with disabilities and veterans. Even with such amendments, Acting Director Dowd noted there would also need to be rulemaking to implement the statutory changes.  In addition, any merger would need to address “different enforcement structures and approaches used by the two agencies.”  Acting Director Dowd noted as one example that the EEOC’s judicially-focused enforcement structure and the OFCCP’s administratively-focused enforcement structure would need to be “bridg[ed].”

Based on these challenges, Acting Director Dowd shared that all of these difficulties “could delay the expected [Fiscal Year] 2019 start for the proposed consolidation, which would result in a concomitant delay in the realization of intended benefits.”

While Acting Director Dowd noted that the merger may be delayed, he emphasized the ability of the two agencies to increase efficiency in the interim through, for example, the existing Memorandum of Understanding between the two agencies. Thus, we may see internal modifications in the near term by the two agencies to “identify operational cost savings by eliminating existing redundancies.”

We will continue to monitor developments on this topic.

BREAKING NEWS: New EEO-1 Form Put On Hold; Employers Have Until March 31, 2018 To Submit Prior Version Of EEO-1 Form

The Office of Management and Budget (“OMB”) has stayed the implementation of the new EEO-1 Form, which added compensation and hours worked components to the annual EEO-1 submission. The OMB’s decision was based in part on concerns about burdens the new form would place on employers and the questionable utility of the new information requirements. Employers who must submit the EEO-1 form will have to submit the prior version of the EEO-1 Form, but will not have to submit 2017 data until March 31, 2018. Read the full summary of the development and key takeaways on Law and the Workplace.

OFCCP Announces “Compliance Assistance” Town Hall Meetings

On August 16, 2017, OFCCP announced that, as part of its efforts to provide compliance assistance to federal contractors, it will be holding three town hall meetings. The meetings will be open to the public and held in Washington D.C., San Francisco, CA, and Chicago, IL.

OFCCP explains that during the meetings, it wants “to obtain your views and learn more about the experiences of federal contractors when implementing and managing their nondiscrimination and equal employment opportunity requirements, and how we can help.”

The dates, times and registration links to the town halls are detailed below:

  1. Date: September 19, 2017 Time: 8:30 AM to 1:00 PM City Location: Washington, DC Registration Link: https://www.eventbrite.com/e/ofccp-compliance-assistance-town-hall-registration-35797146228
  2. Date: September 26, 2017 Time: 8:30 AM to 1:00 PM City Location: San Francisco, California Registration Link:https://www.eventbrite.com/e/ofccp-compliance-assistance-town-hall-registration-36208818551
  3. Date: September 28, 2017 Time: 8:30 AM to 1:00 PM City Location: Chicago, Illinois Registration Link:https://www.eventbrite.com/e/ofccp-compliance-assistance-town-hall-registration-36209277925

U.S. House Committee on Appropriations Votes to Defund Revised Form EEO-1 Requiring Disclosure of Pay Data

On July 13, 2017, the House Committee on Appropriations voted to defund efforts to implement the Equal Employment Opportunity Commission’s (“EEOC”) revised Form EEO-1.  If the Appropriations Bill is ultimately passed, it will severely limit the EEOC’s ability to implement its revised EEO-1. Continue Reading

Google Prevails, In Part (And For Now), In Compensation Data Dispute With OFCCP

On July 14, 2017, an Administrative Law Judge (“ALJ”) for the Department of Labor issued a Recommended Decision and Order (the “Opinion”) in the case brought by the Office of Federal Contractor Compliance Programs (“OFCCP”) against Google over Google’s refusal to turn over certain employee data as part of a compliance audit.  The ALJ’s thorough opinion is informative, providing insights into OFCCP’s processes in compliance audits, basic canons of administrative and constitutional law, as well as the administrative proceedings that have garnered so much of the government contractor community’s attention. Continue Reading

Contractors with Access to Classified Information Now Subject to Heightened Reporting Requirements

Effective June 12, 2017, executive branch agency employees, contractors and subcontractors who have access to classified information or hold sensitive positions must report personal trips abroad as well as a wide range of foreign contacts. This new security directive, “Reporting Requirements for Personnel With Access to Classified Information or Who Hold a Sensitive Position,” was issued by the Office of the Director of National Intelligence and establishes fundamental reporting requirements while still allowing agency heads to impose additional reporting requirements in accordance with their respective authorities. Continue Reading

Labor Secretary Defends OFCCP-EEOC Merger

As previously reported, the Trump Administration’s proposed budget for fiscal year 2018 includes a plan to merge the Office of Federal Contract Compliance Programs (“OFCCP”) into the Equal Employment Opportunity Commission (“EEOC”). Pragmatically, this would add the OFCCP’s broad responsibilities to an already overburdened EEOC, without providing the EEOC any additional funding to accomplish its newly added workload.

On June 7, 2017, Labor Secretary Alexander Acosta testified at a House Appropriations subcommittee hearing in support of the proposal. The Labor Secretary touted the merger as a “commonsense change” that “combines two civil rights agencies that already work together closely.”  The merger, according to Secretary Acosta would achieve a cost saving without reducing enforcement. Continue Reading

LexBlog